Trusts as Part of Estate Planning by Dr Edgar Paltzer
BUSINESS
Three Main Types of Trust When leaving money to certain people in a will, some individuals prefer to establish a trust (or a civil law family foundation) to control the wealth to a degree. This is particularly true when leaving wealth to minors. There are several different types of trust, each of which has its own rules and taxation.
Bare Trusts Bare trusts are used to hold wealth for a child until they reach the age of majority, at which point they are legally entitled to access this wealth and any income (such as dividends and interest) at any time.
Interest in Possession Trusts An interest in possession trust can be used to provide an income to a person without giving them the asset the income is derived from. For example, a portfolio of shares can be left to one’s children as residual beneficiaries, but in an interest in possession trust that states the surviving spouse will receive any income generated from them until they pass away, at which time the shares become the unrestricted property of the named residual beneficiaries.
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Discretionary Trusts A discretionary trust places the decisions as to how the income and sometimes capital from the trust shall be used in the hands of named trustees.
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You can learn about trusts and what distinguishes them from civil law family foundations by visiting the blog of Dr Edgar Paltzer.